The ten signs of a deteriorating vendor relationship – part 5

This is the final installment of the series around vendor relationships and the signs to look out for if you think things are not going well. I hope you’ve enjoyed it and even found some of it useful.

9. You can’t ask the vendor a question without them responding with a legal argument.

This is a sure sign that things are not going well with the vendor. If the standard response to a query, even a simple one, is a reference to contractual terms and conditions or agreed items for delivery then you have a real issue on your hands. Probably best to get out before your respective legal teams have to get involved. Alternatively engage your legal department and get them involved sooner rather than later.

 

10. It costs more to develop offshore than in house.

It pays to understand how many resources you would need to do the work in house and how long it would take. You can then compare this against any cost quoted by the vendor. In most cases the actual cost of outsourcing to an offshore vendor will work out to be around 90 per cent of that internal cost. If your vendor is well over this figure either you have under estimated the complexity of the project or they simply don’t understand what it is you are trying to achieve. Either way something is wrong and you need to work quickly to understand what that is. If it’s the latter then once you are sure it’s not your communications efforts, be wary, as continuing a project with a vendor that does not grasp the project, is a disaster waiting to happen.

The ten signs of a deteriorating vendor relationship – Part 4

7. More effort goes into playing office politics than into delivery.

When a vendor is more interested in keeping onside with your senior management and looking good than in doing what is needed for the success of a project. This is typically accompanied by 1, 2 and 5 from my previous posts. They deliver on time (to look good) and then blame you when it isn’t right.

Tread carefully this often happens when the vendor has a personal relationship with your senior management. Find a strategy that will allow your managers to deal with the issue without looking like they were foolish to engage the vendor. This will help in the long run if you end up in the position of needing to dump the vendor completely.

8. The cost of managing the vendor increases over time.

In a healthy vendor relationship the cost of managing them should decrease over time as trust and working practices are established. When a relationship is turning sour the reverse happens, you spend more and more time managing the relationship and pushing the vendor to undertake even the most basic of tasks.

This is where your senior management come in to play. Use them particularly if they have a relationship with the vendor. Again be careful in your approach. Try presenting the problem in such a way that management will feel as though they are saving the project by acting in the manner you want them to. Let them have the credit and allow them to bask in the glory. Their ego’s won’t normally let them turn down such an opportunity.

The ten signs of a deteriorating vendor relationship – part 3

5. Delays are always blamed on your inability to supply what they want when they want it.

Every delay that is encountered will be blamed on poor or slow responses from your side. Even when they ask you for it at the last minute or worse yet they are asking you for something that they should have produced as part of their agreed work. For example they will deliver a design document two weeks late and then claim that the delay in sign off is due to the fact that the document is still being reviewed by you.

A formal issue tracking process will help mitigate this. However, you need to be proactive in dealing with delays regardless of who is at fault. You also need to be clear to the vendor that late delivery is one thing but blaming your team for a sign off delay due to it is completely unacceptable. Escalate with the vendor senior management if this happens.

6. There are always excuses why they can’t supply the information or samples of their work when you ask for it.

At best this points to a lack of focus on the part of the vendor at worst it may mean that the vendors resources feel they can wait until the last minute before delivering something. Either way you will end up wasting time and energy. Your mistake was not making sure the vendor understands your projects reporting requirements and quality assurance processes.

If you encounter this be wary, it could be masking a deeper issue where by the vendors resources simply don’t understand what they are required to do.

The ten signs of a deteriorating vendor relationship – part 2

3. No care or attention is paid to the billing process.

Believe it or not some vendors are so lax in this area that It can take 3 months for time to be recorded against a project that is planned to run for 6 and 4 months to receive an invoice for the work undertaken. Worse yet when you do get the invoices they are for resources that you have never heard of and don’t match the resources time has been recorded for. The final blow is that the time is all in one large block of hours (not the agreed format of days per month) recorded against a single day. This makes it even more difficult to reconcile the detail on the invoices to your timesheet system.

The quickest way to sort this out is to notify the vendor that 1) time not recorded in your timesheet system will not be paid 2) Invoices that do not match at the resource level to the hours billed each month will also not be paid. If the vendor still can’t sort out what you want them to do before they will get paid then they aren’t likely to be able to figure out what it is you want them to do on your project.

4. Resources constantly change.

If you find yourself turning up to project meetings with your vendor and find that you are faced with yet another group of resources then you have a good indication that the vendor doesn’t really want to deliver the solution you need. Everyone accepts a level of turnover on a project; it is an unavoidable fact of life. But when there is no continuity from week to week on the project let alone between phases of a project you really do need to question the vendors’ commitment. Typically you will have one team engaged to do High Level Design work, a completely different one will turn up when it is time to move to Low Level Design and another previously unknown group will appear just in time to start development.

A vendor that values your working relationship will work at ensuring you are comfortable with the approach they take. They will ensure continuity in the key roles on the project. But, if that is not possible you will know well in advance and you will be involved in the handover to the new resource taking over.

There’s not much you can do about this beyond making sure that the vendor knows your displeasure and that a continuation of poor practices will result in a breach of contract and a termination of the agreement. Unfortunately this will be one for the lawyers so the more you communicate formally and document the problems the easier it will be to prove.

The ten signs of a deteriorating vendor relationship – part 1

1. A Time & Materials project is used as revenue generator.

This is an easy sign to spot. Typically your vendor will repeatedly deliver late against the plan. You will also discover that what is delivered is either incomplete or of such a poor quality as to be unusable. Each iteration of the deliverable will improve, but only slightly. In doing this the vendor is really saying to you that they don’t respect you. As a result it is easier for them to just throw something substandard over the fence and let you waste time and money telling them what they already know i.e. what is wrong with it.

How can resolve a situation like this? First talk to the vendors’ engagement manager. Discuss the problem and leave them in no doubt that you expect the situation to change immediately. If they don’t take this on board then immediately escalate with senior management both in your organisation and the vendors. If you still see no change in attitude then you need to reassess the relationship and fast.

If you find yourself at this point, usually your mistake has been in not putting penalties for poor performance into the agreement. If you do have them, impose them or at least threaten to do so and you will hopefully see a marked improvement in attitude from the vendor. But even this may not be enough to salvage the relationship if things have deteriorated to the point of actually imposing a penalty. By that time you are probably in the position of working through your respective legal teams.

As indicated in my previous post you will have to balance the penalty clauses with incentives for exceeding expectations as it is highly unlikely that a vendor will agree to terms that are solely or heavily in your favour.

2. Their tasks become your tasks.

In technical projects you will find this exemplified by the phenomenon of design by review. This is where your vendor will give you “something” that has the right name on it. However, the contents will be partial and bear no resemblance to the requirement. In order to correct it your team have to provide detailed feedback on where the deliverable does not meet the requirement and why. Along with this will be the need to provide detailed suggestions as to what will meet the requirement.

The next iteration of the document will include some of the information provided plus additional sections that require a separate review and feedback. This cycle will continue until your team has supplied the content of the document in their review comments. Here as above you find that you are wasting time and money telling the vendor what they already know.

Again this should be discouraged by including penalties in the contractual agreements.

Changing Horses Midstream – When do you know it’s time to ditch a vendor.

If you notice a number of the following then it is time to reassess you vendor relationship and either take swift action to head off a further decline and rescue the situation or take the decision to cut your losses. The Top 10 signs (in no particular order) its time to give your vendor its marching orders:

  1. A Time & Materials project is used as revenue generator.
  2. Their tasks become your tasks.
  3. No care or attention is paid to the billing process.
  4. Resources constantly change.
  5. Delays are always blamed on your inability to supply what they want when they want it.
  6. There are always excuses why they can’t supply the information or samples of their work when you ask for it.
  7. More effort goes into playing office politics than into delivery.
  8. The cost of managing the vendor increases over time.
  9. You can’t ask the vendor a question without them responding with a legal argument.
  10. It costs more to develop offshore than in house.
The solution to preventing some of the above is to ensure that appropriate penalties are added to a contract or agreement so as to punish poor performance and discourage bad practices. However, this also needs to be balanced with incentives that reward performance that leads to early delivery and meets quality standards. Get the balance right in your agreement and you have a powerful tool that can be used to help steer a path through most of the issues above.
Over the coming weeks I’ll go into more detail of each of these and look at the indicators you should watch out for.